U. S. Securities and Exchange Commission
                             Washington, D. C. 20549

                                   FORM 10-QSB

                   Quarterly Report Under Section 13 or 15 (d)
                     of The Securities Exchange Act of 1934

                  For the Quarterly period Ended March 31, 1999

                        Commission file Number 000-24933

                             Heritage Bancorp, Inc.
             (Exact Name of Registrant As Specified In Its Charter)


           VIRGINIA                                               54-1914902
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation of Organization)                              Identification No.)

        1313 Dolley Madison Blvd., McLean, Va.            22101
       (Address of Principal Executive Offices)         (Zip Code)

                          REGISTRANT'S TELEPHONE NUMBER
                                  703-356-6060


                                       N/A
                  (Former Name, Former Address and Former Year,
                          If Changed Since Last Report)



              INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS
        FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF
                      EXCHANGE ACT DURING THE PRECEDING 12
             MONTHS (OF SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
                REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
                   SUBJECT TO SUCH FILING REQUIREMENTS FOR THE
                                  PAST 90 DAYS.

                            YES__x_______ NO__________


            COMMON SHARES OUTSTANDING AS OF April 15,1999: 2,294,617


                                        1

<PAGE>
                                      INDEX
HERITAGE BANCORP,INC.

Part 1 Financial Information                                               Page

       Item 1 Financial Statements
              Balance Sheets
                March 31, 1999 and December 31, 1998                        3

              Statement of income
                Three months ended March 31, 1999 and 1998                  4

              Statement of Stockholders Equity
                Three months ended March 31, 1999 and 1998                  5

              Statement of Cash Flows
                Three months ended March 31, 1999 and 1998                  6

                Notes to Financial Statements                               7

     Item 2. Managements Discussion and Analysis of
                Financial Condition and Results of operation                8
                 and Selected Financial Data

Part II. Other Information:                                                16

         Item 1. Legal Proceedings
         Item 2. Changes in Securities and Use of Proceeds
         Item 3. Defaults Upon /Senior Securities
         Item 4. Submission of Matters to a Vote of Security Holders
         Item 5. Other Information
         Item 6. Exhibits and Reports on Form 8-K


                                        2

<PAGE>
<TABLE>


ITEM I.

Part I. Financial Information

                            HERITAGE BANCORP,INC. AND SUBSIDIARY
                            CONSOLIDATED STATEMENTS OF CONDITION
                                 (in thousands, unaudited)


<CAPTION>
ASSETS                                            MARCH 31, 1999         DECEMBER 31, 1998
                                                  --------------         -----------------

<S>                                                   <C>                        <C>      
Cash and due from banks                               $   1,870                  $   5,825
Federal Funds Sold                                        6,000                      8,550

   Total Cash and Due From Banks                          7,870                     14,375

Securities available for sale                            22,757                     19,824
Securities held to maturity                                   0                          0

Loans, Net                                               28,665                     29,181

Premises and Equipment, Net                                 454                        376
Other Real Estate Owned                                     263                        263
Accrued Int and other Assets                              1,041                  $     757
                                                      ---------                  ---------

TOTAL ASSETS                                          $  61,050                  $  64,776
                                                      =========                  =========

LIABILITIES

Noninterest bearing deposits                          $  12,562                  $  17,386
Interest bearing deposits                                38,060                     36,056
                                                      ---------                  ---------
   TOTAL DEPOSITS                                        50,622                     53,442

Repurchase agreements                                     1,278                      2,287
Other liabilities                                           119                        119
                                                      ---------                  ---------
   TOTAL LIABILITIES                                     52,019                     55,848
                                                      ---------                  ---------

CAPITAL
Common Stock                                              2,295                      2,295
Surplus                                                   6,530                      6,530
Undivided profits                                           205                         28
Accumulated other comprehensive                                   
income net                                                    1                         75
                                                      ---------                  ---------
   TOTAL CAPITAL                                          9,031                      8,928
                                                      ---------                  ---------

TOTAL CAPITAL AND LIABILITIES                         $  61,050                  $  64,776
                                                      =========                  =========
Notes to financial statements are an
integral part of these statements.
</TABLE>

                                             3

<PAGE>


                     HERITAGE BANCORP,INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATION
                      Three Months Ending March 31, 1999


                                                 Three Months Ended        
                                         -----------------------------------
INTEREST INCOME                          March 31, 1999       March 31, 1998
                                         --------------       --------------

Loans                                        $  699,000           $  553,000
Securities                                      319,000              227,000
Federal Funds Sold                               81,000               57,000
                                             ----------           ----------
  Total interest income                      $1,099,000           $  837,000

INTEREST EXPENSE

Interest checking deposit                        36,000               31,000
Other time deposit                              241,000              198,000
Cert.of deposit $100,000 or more                 71,000               45,000
Repurchase agreements                            12,000                3,000
                                             ----------           ----------
   Total interest expense                       360,000              277,000

Net interest income                             739,000              560,000

Provision for loan losses                         7,000                2,000
                                             ----------           ----------

Net interest income after
provision for loan losses                       732,000              558,000

OTHER INCOME

Service charges on deposit accounts              26,000               25,000
Other operating income, net                       8,000                7,000
Gain or loss on sale of securities                    0                    0
                                             ----------           ----------
   Total other income                            34,000               32,000

OTHER EXPENSES

Salaries and employee benefits                  295,000              264,000
Occupancy expense                                77,000               74,000
Equipment expense                                14,000               10,000
Other operating expenses                        184,000              141,000
                                             ----------           ----------
   Total other expenses                         570,000              489,000

Income before income taxes                      196,000              101,000

Income tax                                       19,000                    0
                                             ----------           ----------

NET INCOME                                   $  177,000           $  101,000
                                             ==========           ==========

Basic income per share                       $     0.08           $     0.07

Diluted income per share                     $     0.08           $     0.07

Weighted avg shares outstanding               2,294,617            1,489,636




Notes to financial statements are an integral part of these statements.

                                      4

<PAGE>
<TABLE>

                                                HERITAGE BANCORP,INC. AND SUBSIDIARY
                                     Consolidated Statements of Change in Stockholder's Equity
                                      For Three Months Ended March 31, 1999 and March 31 1998
                                                  (Dollars in Thousands,unaudited)

<CAPTION>


                                                                                               Accumulated
                                                                                                     other
                                                                   Comprehensive   etained   comprehensive                   Capital
                                                           Total          income   arnings          income   Common stock    surplus
                                                           -----   -------------   -------   -------------   ------------    -------

<S>                                                      <C>              <C>      <C>               <C>          <C>        <C>    
Balances January 1 1998                                  $ 4,730                   $  (105)          $  18        $ 1,490    $ 3,327
Comprehensive income
  Net income                                                 101          $  101       101               -              -          -
  Other comprehensive income net of tax                        -               -         -               -              -          -

  Unrealized holding gain(loss) arising during period        (15)            (15)        -             (15)             -          -
  net of tax of $(8)
  Less reclassification adjustment                             -               -         -               -              -          -
  Other comprehensive income, net of tax                     (15)            (15)        -             (15)             -          -
                                                          ------          ------                    ------
  Total comprehensive income                                  86          $   86         -                              -          -
                                                          ------          ======   -------                        -------    -------
Balances March 31 1998                                    $4,816                   $    (4)         $    3        $ 1,490    $ 3,327
                                                          ======                   =======          ======        =======    =======


Balances January 1 1999                                  $ 8,928                   $    28          $   75        $ 2,295    $ 6,530
Comprehensive income
  Net income                                                 177          $  177       177               -              -          -
  Other comprehensive income net of tax                        -               -         -               -              -          -

  Unrealized holding gain(loss) arising during period        (74)            (74)        -             (74)             -          -
  net of tax of $(39)
  Less reclassification adjustment                             0               0         -               0              -          -
                                                          ------          ------                    ------
  Other comprehensive income, net of tax                     (74)            (74)        -             (74)             -          -
                                                          ------          ------                    ------
  Total comprehensive income                              $  103          $  103                                        -          -
                                                          ------          ======

Balances March 31 1999                                    $9,031                   $   205          $    1        $ 2,295    $ 6,530
                                                          ======                   =======          ======        =======    =======
</TABLE>




                                                                  5

<PAGE>
<TABLE>
HERITAGE BANCORP, INC. AND
SUBSIDIARY

Consolidated Statements of Cash Flows                            Three months Ended   
(In Thousands of Dollars)                                   ---------------------------
                                                            Mar 31, 1999  Mar. 31, 1998
                                                            ------------  -------------
<S>                                                            <C>              <C>    
Cash Flows From Operating Activities
 Net income                                                    $   177          $   101
 Adjustments to reconcile net income(loss) to net
   cash provided by (used in) operating activities
     Provision for loan losses                                       7                2
     Depreciation and amortization                                  12               73
     Amortization of investment security
     premiums, net of discount                                       9                6
    (Increase)decrease in accrued interest and
      other assets                                                (259)            (210)
    (Increase)Decrease in accrued interest and other
     liabilities                                                     0               (6)
                                                               -------          ------- 
      Net cash provided by(used in) operating activities       $   (54)         $   (34)
                                                               -------          ------- 


Cash Flows From Investing Activities
  Maturities of securities available-for-sale                  $ 4,000          $ 3,250
  Purchases of securities available-for-sale                    (7,055)          (5,497)
 (Increase)decrease in loans                                       523             (445)
  Purchase of premises and equipment                               (90)               0
                                                               -------          ------- 
     Net cash provided by (used in) investing activities       $(2,622)         $(2,692)
                                                               -------          ------- 


Cash Flows From Financing Activities
  (Decrease) in non interest-bearing deposits                  $(4,824)         $(2,861)
  Increase(Decrease)in certif of deposits and savings            2,004            1,640
  Increase(Decrease) in securities sold under repurchase
  agreement.                                                    (1,009)             315
                                                               -------          ------- 
       Net cash provided by (used in) financing activities     $(3,829)         $  (906)
                                                               -------          ------- 

     Net change in cash and cash equivalents                    (6,505)         $(3,632)

Cash and cash equivalents, beginning of year                    14,375            9,587
                                                               -------          ------- 

Cash and cash equivalents, end of period                       $ 7,870          $ 5,955
                                                               =======          =======
</TABLE>


                                            6

<PAGE>

HERITAGE BANCORP,INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS

(1)     Basis of Presentation

        The financial  statements included herein have been prepared by the Bank
without audit. In the opinion of management,  the quarterly  unaudited financial
statements  include all adjustments,  consisting of normal  recurring  accruals,
necessary  for a fair  presentation  of the  financial  position  and results of
operations  at and for the  periods  presented.  The Company  believes  that the
disclosures  are  adequate to make the  information  presented  not  misleading,
however, the results for the periods presented are not necessarily indicative of
results to be expected for the entire year.

(2)     Accounting Policies

        The interim financial information should be read in conjunction with the
Company's  1998 Annual  Report on Form  10-KSB.  Management  is required to make
estimates  and  assumptions  that  affect  amounts  reported  in  the  financial
statements. Actual results could differ significantly from estimates.

(3)     Earnings Per Share

       The  following  shows the  weighted  average  number  of  shares  used in
computing earnings per share and the effect on weighted average number of shares
of diluted potential common stock. Potential dilutive common stock had no effect
on income available to common shareholders.

                           March 31, 1999                March 31,1998        
                      --------------------------------------------------------
                                     Per Share                     Per Share
                       Shares         Amount          Shares        Amount 
                       ------         ------          ------        ------ 

Basic earnings
  per share           2,294,617      $    .08       1,489,636       $    .07
                                     ========                       ========
Effect of dilutive
  securities:
    Stock options        55,550                        37,375
    Warrants                  0                             0
                      ---------                      --------

Diluted earnings
  per share           2,350,167      $    .08       1,527,011        $    .07
                      =========      ========       =========        ========

(4)    Holding Company Formation

       On October 1, 1998, the Heritage Bank became a wholly-owned subsidiary of
Heritage  Bancorp,  Inc., a newly formed stock holding  company,  pursuant to an
agreement  and plan of  reorganization  approved by the Bank's  shareholders  on
August 26, 1998.  Upon completion of the  reorganization,  holders of the Bank's
common stock became holders of Heritage  Bancorp,  Inc.  common stock in a share
for share exchange.  The common stock of Heritage Bancorp, Inc. will continue to
trade on the Nasdaq SmallCap Market under the symbol "HBVA."


                                        7

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

General

         The  following  discussion  and  analysis of  financial  condition  and
results of operations,  unless otherwise disclosed,  presented in this quarterly
report on Form 10-QSB  represents  the activities of the Company for the quarter
ended  March 31,  1999 and  should  be read in  conjunction  with the  financial
statements of the Company included in this Form 10-QSB.

         Heritage Bancorp, Inc. (the "Company"), a Virginia corporation,  is the
holding  company  for The  Heritage  Bank (the  "Bank"),  a  Virginia  chartered
commercial  bank.  On October 1, 1998,  the Company  acquired all of the capital
stock of the Bank  and  shareholders  of the  Bank  became  shareholders  of the
Company  in a share  for share  exchange  pursuant  to a plan of  reorganization
approved by the Bank's  shareholders on August 26, 1998, whereby the Bank became
the wholly-owned subsidiary of the Company (the "Reorganization"). The Company's
sole  business  activity is ownership of the Bank.  The  Company's  common stock
trades on the Nasdaq SmallCap Market under the symbol "HBVA".

         The Bank is the only independent financial institution headquartered in
McLean,  Virginia.  Established  in 1987,  the Bank  operated as a  wholly-owned
subsidiary of Heritage Bankshares, Inc. (formerly Independent Banks of Virginia,
Inc.)  until  1992  when  it  became  an   independent   bank.  The  Bank  is  a
well-capitalized,   profitable  community  bank  dedicated  to  financing  small
business  and consumer  needs in its market area.  The Bank also is committed to
providing personalized  "hometown" quality service to its customers by tailoring
its  products  and services to appeal to its local  market.  The Bank  currently
operates  two  full-service  offices and engages in a broad range of lending and
deposit services aimed at individual and commercial customers in the McLean area
of Fairfax County, Virginia and the Sterling area of Loudoun County.

         The  business of the Bank  consists  of  attracting  deposits  from the
general  public and using these funds to originate  various  types of individual
and  commercial  loans  primarily in the McLean and Sterling  areas.  The Bank's
commercial activities include providing checking accounts, money market accounts
and certificates of deposit to small and medium sized businesses.  The Bank also
provides  credit  services,  such as lines of credit,  term loans,  construction
loans,  and letters of credit,  as well as real estate  loans and other forms of
collateralized  financing.  The Bank's products include checking  accounts,  NOW
accounts,  savings  accounts,  certificates  of deposit,  installment  accounts,
construction and other personal loans,  home improvement  loans,  automobile and
other consumer financing.

         On May 18, 1998, the Bank closed a secondary offering of 805,000 shares
of its common stock,  par value $1.00 per share (the  "Offering"),  at $5.50 per
share,  raising  $4.4 million in gross  proceeds.  After  offering  expenses and
underwriting  commission , the Bank received  $4,012,204 in new capital from the
offering.

                                        8

<PAGE>
<TABLE>

         The selected  financial  ratios and other data of the Company set forth
below is derived  in part from,  and  should be read in  conjunction  with,  the
Unaudited  Financial  Statements  of the  Company  and Notes  thereto  presented
elsewhere in this report.
                                          SELECTED FINANCIAL DATA
<CAPTION>
                                                       For the Three Months           For the Three Months
                                                        Ended Mar. 31, 1999            Ended Mar. 31, 1998
                                                       ---------------------------------------------------
                                                                       (Dollars in thousands)
                                                                            (Unaudited)
<S>                                                                  <C>                          <C>    
Summary of operating results:
Total interest income...............................                 $1,099                       $   837
Total interest expense..............................                    360                           277
                                                                     ------                       -------
Net interest income.................................                 $  739                       $   560
Provision for (recovery of) loan losses.............                      7                             2
                                                                     ------                       -------
Net interest income after provision for 
   (recovery of)loan losses.........................                 $  732                        $  558
Other income........................................                     34                            32
Other expenses......................................                    570                           489
                                                                     ------                       -------
Income (loss) before taxes..........................                    196                           101
Income tax expense (benefit)(1).....................                     19                             0
                                                                     ------                       -------
Net income (loss)...................................                 $  177                       $   101
                                                                     ======                       =======

Per share:
Basic earnings (loss) per share.....................             $     0.08                    $     0.07
Diluted earnings (loss) per share...................                   0.08                          0.07
Cash dividend declared..............................                      0                             0
Book value at period end............................                   3.94                          3.26
Common shares outstanding...........................              2,294,617                     1,489,636

Balance sheet data (at period end):                          March 31, 1999             December 31, 1998
                                                           ----------------             -----------------

Loans, net of unearned interest.....................              $  29,083                     $  29,610
Allowance for loan loss.............................                    418                           429
Total assets........................................                 61,050                        64,776
Total deposits......................................                 50,622                        53,442
Total stockholders' equity..........................                  9,031                         8,928

Performance and asset quality ratios:
Return on average total assets (3)..................                   1.18%                         0.26%
Return on average stockholders' equit (3)...........                   7.84                          1.79
Average stockholders' equity to average total       
   assets...........................................                  15.07                         12.00
Non-accrual and past due loans to total loans.......                   0.46                         14.47
Allowance for loan losses to total loans............                   1.44                          1.45
Net yield...........................................                   4.81                          3.87
Net interest margin(2)..............................                   5.15                          5.09
------------------
</TABLE>
(1)      At December 31, 1998, the Company had available  approximately $138,000
         of an operating loss carryforward  which could be offset against future
         income.
(2)      Net interest  margin is  calculated as net interest  income  divided by
         average  earning  assets and  represents the Company's net yield on its
         earning assets.
(3)      Annualized for the three months ended March 31, 1999.


                                        9

<PAGE>

Comparison of Financial Condition at March 31, 1999 and December 31, 1998

         Total assets  decreased  $3.7 million,  or 5.8%,  from $64.8 million at
December 31, 1998 to $61.0 million at March 31 1999. This decrease in assets was
due to the withdrawal of funds from attorneys escrow  accounts.  On December 28,
1998 the Bank had $7.0 million dollars  deposited into attorneys escrow account.
These funds were  withdrawn  the first week of January  1999.  In addition,  net
loans decreased by $500,000. Federal funds sold decreased $2.5 million from $8.5
million at December 31, 1998 to $6.0 million at March 31,  1999.  This  decrease
primarily is due to use of these funds to purchase U. S. Agencies Bonds.

         Securities  available for sale increased $2.9 million,  or 14.8%,  from
$19.8  million at December  31,  1998 to $22.8  million at March 31,  1999.  The
increase was caused by the  investment of funds  transferred  from the fed funds
sold into the bond portfolio.

         Net loans decreased  $500,000,  or 1.8%, from $29.1 million at December
31, 1998 to $28.7 million at March 31, 1999.  This decrease was primarily due to
the scheduled payoff of one commercial loan.

         Total deposits  decreased $2.8 million,  or 5.3%, from $53.4 million at
December 31, 1998 to $50.6  million at March 31, 1999.  This decrease was caused
by an decrease in attorney's escrow account balances.  Of these deposits,  $40.0
million were core deposits which the Bank uses to originate loans.

         Repurchase  agreements  at March  31,  1999  totaled  $1.3  million  as
compared to $2.3 million  repurchase  agreements at December 31, 1998.  The Bank
utilizes repurchase agreements to fund customer sweep accounts.



                                       10

<PAGE>

Comparison of Operating Results for the Three Months Ended March 31,
1999 and 1998

         Net income.  The Company  had a net income for the three  months  ended
March 31,  1999 of $177 000,  or $0.08  basic and  diluted  earnings  per share,
compared to net income of  $101,000,  or $0.07 basic and  diluted  earnings  per
share,  for the three months ended March 31, 1998. This $76,000 increase was due
primarily to an increase in interest on loans and  securities of $262,000  which
was  partially  offset by an increase  in  interest  on deposits of $83,000,  an
increase in salaries  and  benefits of $31,000,  an increase in other  operating
expenses of $43,000  some of which was due to the opening of the Loudoun  Branch
and income tax of $19,000.

         Interest Income. Total interest income for the three months ended March
31, 1999 was $1,1  million as compared to $837,000  for the three  months  ended
March 31, 1998,  representing an increase of $262,000,  or 31.3%.  This increase
was due  primarily  to the  increase in the bond  portfolio  and interest on Fed
Funds sold and interest on loans.

         Interest  Expense.  Total interest expense  increased from $277,000 for
the three  months  ended March 31, 1998 to $360,000  for the three  months ended
March 31, 1999, representing an increase of $83,000, or 30.0%. This increase was
due primarily to the increase in deposits from the prior period.

         Net Interest  Income.  Net interest  income is the  difference  between
interest earned on loans, investments, securities and short term investments and
interest  paid on  deposits.  Factors  affecting  net  interest  income  include
interest rates earned on loans and investments  and those paid on deposits,  the
mix and volume of earning assets and interest bearing  liabilities and the level
or  non-earning  assets  and  non-interest  bearing   liabilities.   The  Bank's
management  seeks to maximize net interest  income by managing the balance sheet
and  determining  the optimal  product mix with  respect to yields on assets and
costs of funds in light of projected economic  conditions,  while maintaining an
acceptable level of risk.

         Net interest income  increased in the three months ended March 31, 1999
by $179,000,  or 32.0%,  from $560,000 for the three months ended March 31, 1998
to $739,000 for the three months  ended March 31,  1999.  This  increase was due
primarily to the increase in the bond portfolio and interest on Fed Funds sold.

         Provision for Loan Losses.  The provision for loan losses for the three
months  ended  March 31,  1999 was  $7,000,  as  compared to $2,000 for the same
period in the prior year, representing a $5,000 increase.

         The level of the allowance  for loan losses is based upon  management's
ongoing  review of the loan  portfolio and includes the present and  prospective
financial  condition of borrowers,  consideration of actual loan loss experience
and projected economic conditions in general and for the Bank's service areas in
particular.  Management  believes  that the  provision  for loan  losses and the
allowance for loan losses are  reasonable and adequate to cover any known losses
and any  losses  reasonably  expected  in the  existing  loan  portfolio.  While
management estimates loan losses using the best available  information,  such as
independent  appraisals  on  collateral,  no assurance  can be given that future
additions to the  allowance  will not be necessary  based on changes in economic
and real estate market conditions,  further information obtained regarding known
problem  loans,   identification   of  additional   problem  loans,   regulatory
examinations and other factors, both within and outside of management's control.


                                       11

<PAGE>

          Other income. Total other income consists primarily of service charges
and fees associated with the Bank's checking and savings  accounts.  Total other
income  increased  $2,000 from $32,000 for the three months ended March 31, 1998
to $34,000  for the three  months  ended March 31,  1999.  This was caused by an
increase in service charges on deposit accounts.

          Other expense.  Other expense consists primarily of operating expenses
for compensation and related benefits, occupancy, federal insurance premiums and
operating assessments and data processing charges. Total other expense increased
by $81,000, or 16.6%, from $489,000 for the three months ended March 31, 1998 to
$570,000 for the three months  ended March 31, 1999.  This  increase was due, in
part, to a $31,000  increase in salaries and benefits and other costs  connected
with the opening of the branch in Loudoun County.

          Income Tax Expense. The Company had a tax liability of $19,000 for the
three  months  ended  March 31, 1999 and no  liability  for March 31,  1998.  At
December 31, 1998, the Company had operating loss carryforwards of approximately
$138,000 that may be offset against future taxable  income.  The Company expects
to use its net operating loss  carryforward in its entirety by the end of fiscal
year 1999.



                                       12

<PAGE>

Liquidity and Capital Resources

         Liquidity  is a measure of the Bank's  ability to  generate  sufficient
cash to meet present and future financial obligations in a timely manner through
either the sale or maturity of existing  assets or the acquisition of additional
funds through liability  management.  These obligations include the credit needs
of customers,  funding deposit withdrawals, and the day-to-day operations of the
Bank. Liquid assets include cash,  interest-bearing deposits with banks, federal
funds  sold,  and  certain  investment  securities.  As a result  of the  Bank's
management  of liquid  assets and the  ability  to  generate  liquidity  through
liability funding, management believes that the Bank maintains overall liquidity
sufficient  to satisfy  its  depositors'  requirements  and meet its  customers'
credit needs. The levels of the Bank's liquid assets are dependent on the Bank's
operating,   financing  and  investing   activities  during  any  given  period.
Management believes it will have adequate resources to fund all commitments on a
short-term and long-term basis in accordance with its business strategy.

         As of March  31,  1999,  cash,  federal  funds  sold,  held-to-maturity
investment securities maturing within one year and available-for-sale securities
represented  58.87% of  deposits  and other  liabilities,  compared to 61.24% at
December 31, 1998.

         Management  continuously  reviews the  capital  position of the Bank to
insure  compliance with minimum  regulatory  requirements,  as well as exploring
ways to increase capital either by retained earnings or other means.

         Banks are required to maintain minimum risk-based capital ratios. These
ratios  compare  capital,  as defined by the risk-based  regulations,  to assets
adjusted  for their  relative  risk as  defined by the  regulations.  Guidelines
require  banks  to have a  minimum  Tier 1  capital  ratio,  as  defined  by the
regulators,  of 4.00% and a minimum Tier 2 capital ratio of 8.00%, and a minimum
4.00% leverage capital ratio. On March 31, 1999, the Bank's Tier 1 capital ratio
was 24.89%,  Tier 2 capital ratio was 26.14% and leverage  ratio was 15.04%.  At
March 31, 1999, the Bank exceeded all of its regulatory capital requirements.

         At March 31, 1999,  the total  stockholders'  equity of the Company was
$9.0  million,  and the ratio of average  stockholders'  equity to average total
assets was 15.07%, as compared to 12.00% for 1998.

Year 2000 Issues

         The "Year 2000 Problem" centers on the inability of computer systems to
recognize  the Year 2000.  Many  existing  computer  programs  and systems  were
originally  programmed  with six digit  dates that  provided  only two digits to
identify the calendar year in the date field,  without  considering the upcoming
change  in the  century.  With the  impending  millennium,  these  programs  and
computers will  recognize "00" as the year 1900 rather than the Year 2000.  Like
most financial service providers,  the Bank may be significantly affected by the
Year 2000 Problem due to the nature of financial  information.  Furthermore,  if
computer  systems are not  adequately  changed to identify  the Year 2000,  many
computer applications could fail or create erroneous results.

         In addition,  noninformation  technology  systems,  such as telephones,
copies  and  elevators  may  contain  embedded  technology  which  controls  its
operations  and  which may be  affected  by the Year 2000  Problem.  Thus,  even
noninformation  technology  systems  may  affect the  normal  operations  of the
Company upon the arrival of the Year 2000.

                                       13

<PAGE>

       To address the Year 2000 Problem, the Bank hired an outside consultant to
assess  the  impact  of the Year 2000  Problem  on the  Bank.  Because  the Bank
outsources its data processing  operations,  a significant component of the Year
2000 plan is working with external  vendors to test and certify their systems as
Year 2000 compliant. The Bank's external vendors have surveyed their programs to
inventory  the  necessary  changes  and have  begun  correcting  the  applicable
computer programs and replacing equipment so that the Bank's information systems
will be Year 2000 compliant  prior to the end of 1998. This will enable the Bank
to devote  substantial  time to the testing of the upgraded systems prior to the
arrival of the millennium in order to comply with all applicable regulations.

         The Company's timetable for working on the Year 2000 Problem is divided
into the following five phases:
<TABLE>
<CAPTION>
Phase                Description                                          Status
-----                -----------                                          ------
<S>                  <C>                                                  <C>
1. Awareness         Define the problem.                                  Completed 11/1/97.
2. Assessment        Identify all systems and criticality of systems.     Completed 6/1/98
3. Renovation        Program enhancements, hardware and software          99% complete
                     upgrades, system replacements, and vendor            12/30/98
                     certifications.
4. Validation        Test and verify system changes.                      completed
                                                                          12/30/98
5. Implementation    Components certified as Year 2000 compliant and      99% complete
                     moved to production.                                 12/30/98
</TABLE>
         Contingency Planning.  The Bank has a contingency plan to keep the Bank
in operation in the event that some Year 2000 problems have been  overlooked and
system malfunctions occur at the turn of the century. This plan was developed by
the Bank's outside consultant with the help of Bank management.  The Company has
developed  contingency or alternate plans for its mission  critical systems on a
department-by-  department  basis in anticipation of potential  unplanned system
difficulties  or  third-party  failures  at  January  1,  2000 or dates  beyond.
However,  the Bank understands  that certain events beyond its control,  such as
extended power outages and loss of telecommunications,  may diminish its ability
to provide  minimum  levels of service.  Failure of these  services  will affect
companies,  individuals  and the  government,  and can not be remedied by anyone
other than the responsible party. For some systems, contingency plans consist of
using or reverting to manual systems until the problems can be corrected.

         While the Company expects to complete its Year 2000 project in a timely
manner,  it cannot guarantee that the systems of companies with whom it conducts
business,  will also be  completed  in a timely  manner.  The  failure  of these
entities to adequately  address the Year 2000 Problem could adversely affect the
Company's and Bank's ability to conduct business.

         Costs.  The Company  currently  estimates its total direct and indirect
cost will be  $35,000.  To date,  the  Company  has spent  $31,000  on Year 2000
issues.  The  costs  of the  project  and the date on  which  the Bank  plans to
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including the
continued availability of certain resources,  third party modification plans and
other factors.  However,  there can be no guarantee that these estimates will be
achieved,  and actual  results  could differ  materially  from those  plans.  In
addition, there can be no guarantee that the systems of other companies on which


                                       14

<PAGE>
the Bank's systems rely will be timely  converted,  or that a failure to convert
by  another  company,  or a  conversion  that is  incompatible  with the  Bank's
systems,  would not have a material  adverse  effect on the Bank. The Bank has a
contingency  plan to keep the bank in operation in the event that some year 2000
problems have been overlooked and system  malfunctions  occur at the turn of the
century.  This plan was developed by the Bank's outside consultant with the help
of Bank management.


Provision for Loan Losses

         For the three months ended March 31, 1999 the provision for loan losses
was $7,000,  a $5,000 increase  compared to the $2,000 allowance for loan losses
recorded in the first three months of 1998.

 An analysis of the allowance for loan losses is as follows:

Loan Loss Reserve

Balance, December 31, 1998                      429,000
Provision for Loan Losses                         7,000
Charge-offs                                     (20,000)
Recoveries                                        2,000
                                               --------
Balance, March 31,1999                          418,000
                                               ========


         The level of the allowance is based upon management's ongoing review of
the loan portfolio and includes the present and prospective  financial condition
of  borrowers,  consideration  of actual  loan  loss  experience  and  projected
economic conditions in general and for the Bank's service areas in particular.

Potential Problem Loans

         At  March  31,  1999,  in  addition  to  $17,000  of  loans  on  either
non-accrual  status or loans  past due 90 days or more and still  accruing,  the
Bank had  approximately  3.25% of the loan  portfolio in loans which were either
internally  classified  or  specially  mentioned  and  require  more than normal
attention and are potential  problem loans.  The Bank has considered these loans
in establishing the level of the allowance for loan losses. As of March 31 1998,
$266,000 of loans were either on a non-accrual  status or loans past due 90 days
or more  and  still  accruing.  In  addition  to these  loans,  8.0% of the loan
portfolio was either internally  classified or specially  mentioned and required
more than normal attention and considered potential problems loans.

                                       15

<PAGE>

Part II   OTHER INFORMATION

Item 1. Legal Proceedings

         Brault,et  al., v. The Heritage  Bank. The Bank has settled this matter
in principle as of March 2, 1999 for a total cash payment of  $50,000.00,  which
involved  a  $20,000.00  payment  from the Bank and  $30,000.00  from the Bank's
insurance  carrier.  The  parties  are now in the  process  of  preparing  final
settlement  documents for  execution  which will result in the dismissal of this
case with prejudice. The Bank's contribution to this settlement was deemed to be
less than the cost to be expended by the Bank in defending the matter.

Item 2. Changes in Securities and Use of Proceeds
               None


Item 3. Defaults upon Senior Securities
               None


Item 4. Submission of matters to a Vote of Security Holders
               None


Item 5. Other Information
               None


Item 6. Exhibits and Reports on Form 8-K

         (a) Exhibits

              Exhibit 27.1-Financial Data Schedule* 
             *Filed in electronic format only.


         (b) Reports on Form 8-K

               None


                                       16

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act 1934, the Registrant
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.


                                              HERITAGE BANCORP, INC.
                                                 (Registrant)

Date: May 10, 1999                          /s/ William B. Sutphin
                                            -------------------------------
                                            William B. Sutphin
                                            Senior V. P. and Cashier



                                       17